If you’ve watched much late night TV, you’ve probably seen the commercials for debt relief services promising the path out of debt through settlement with creditors. These companies ask consumers to pay them their money, then they’ll attempt reach out to the creditors and, they say, settle all debts for a fraction of what is owed.
In these tough times, consumers are looking for any help they can get, but many commentators say that debt relief agencies are a rip-off. Many cite the fact that the services pay themselves first, and, only after they have paid themselves, do they try to settle the debts.
As a creditor’s attorney, I’ve worked with these agencies on a number of occasions. On one hand, it’s efficient to deal with a business-savvy party on the other end of a debt repayment transaction. On the other, I know how the system works, and I know that, for any dollar they are offering to my creditor client, they have already kept as much in their own pocket.
Long story short, be wary when dealing with one of these companies, on either side of the table.